Integrated Business Planning Maturity Leads to Better Decisions

Integrated Business Planning Maturity Leads to Better Decisions

Companies who said IBP is effective and impactful are nearly three times as likely to have real-time visibility to risk issues than those who have no IBP process in place.

In the study of more than 1,000 supply chain professionals, 63% of top executives believe their company’s towards Integrated Business Planning (IBP) is effective and impactful, offering organizations greater risk management and resiliency capabilities.

A recent JDA/SCM World Research Report, entitled, “Authority at the C-Suite: Flipping the IBP Cascade to Drive Business Value,” reveals the shift from Sales & Operations Planning (S&OP) towards Integrated (IBP).

“Supply chain leaders face many challenges in today’s volatile economy, including increased risk and uncertainty, putting pressure on profitability and growth,” said Fred Baumann, group vice president, manufacturing industry strategy, JDA. “The research shows a direct connection between effective IBP programs and improved risk monitoring and management, as well as to advanced supply chain capabilities such as supply chain segmentation and cost-to-serve analysis.

“The research also indicated that effective IBP programs are more likely to be automated, as are their risk management, segmentation and cost-to-serve processes. Automation unlocks the agility organizations need to not only reduce and prevent supply chain risks, such as supply shortages, production disruptions or quality issues, but also to better leverage segmentation and cost-to-serve analysis programs for more profitable operations. The lynchpin of these processes and capabilities is IBP, which is the foundation for a profitable and adaptive seamless supply chain.”

Companies who said IBP is effective and impactful are nearly three times as likely to have real-time visibility to risk issues than those who have no IBP process in place. These organizations also have more fully implemented global risk monitoring and control towers than companies that do not have IBP processes in place at a rate of 2X.

Specifically, those who have an effective and impactful IBP program are more likely to have both real-time alerts in place or planned (82% vs. 55%) and have global risk monitoring and control towers in place or planned (79% vs. 53%) than companies that do not have an IBP program in place or planned.

Those with impactful IBP programs are also more likely to have dedicated risk management teams (78% vs. 52%) and, not surprisingly, are far more likely to be automated (59% vs. 24%)

These findings suggest that companies that effectively leverage IBP programs have more mature supply chain operations supported by technology, and are better equipped to manage risk than their peers.

IBP is enabling automated supply chain segmentation and cost-to-serve analysis

Two of the most critical supply chain initiatives for profitable growth in today’s volatile, consumer-driven economy are supply chain segmentation and cost-to-serve analysis. Automating these two activities increases the value of IBP processes and technology.

The study found that companies with automated IBP technology are more likely to also have automated supply chain segmentation programs (59% vs. 24%) and automated cost-to-serve analysis (69% vs. 38%). These companies better understand their customers and their value to the business, and can deliver improved service based on the needs of each segment.

More than half of the organizations surveyed who feel IBP is effective and impactful have automated IBP. Many of these companies enhance the IBP process with supply chain segmentation, which identifies unique customer value expectations, the network capabilities needed to deliver against those expectations and supports appropriate supply chain operating models for each segment on an ongoing basis.

Additionally, almost 70% of those surveyed with IBP technology that is effective and impactful also have automated cost-to-serve analysis, which identifies which segments and/or customers are more costly to serve, and thus most impact margins. Cost-to-serve analysis is a critical input to segmentation strategies which can be an integral part of effective IBP programs. Automation also eliminates much of the laborious preparation work for IBP analysis.

“The quantitative data and case examples in this research point to a clear trend: automation of front-end preparation frees up valuable resources to focus on actions after executive decisions are made,” said Matt Davis, senior vice president, research, SCM World. “Tomorrow’s IBP will foster a process in which supply chain will arm the C-suite not just with visibility on the future but, more importantly, what to do in response to that insight, all while balancing risk and opportunity.”

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